Yesterday, the Employment Minister Chris Grayling hailed the latest ONS unemployment figures as a step in the right direction, with an overall increase in employment, powered by the private sector in spite of the beginnings of public-sector job cuts.
Meanwhile on the same day, Shadow Work and Pensions Secretary Liam Byrne warned that the latest ONS unemployment figures showed worrying signs of a stagnant labour market with a rising unemployment-benefit bill.
So who’s right? Erm... both.
Partly, it depends on what timescale is analysed – the headline figures are on a rolling quarterly basis; those seeking an alternative interpretation look to the monthly breakdown – a less reliable trend but also one not distorted by previously published results.
Partly, it depends on one’s definition of unemployment. The common understanding of the term is simply the number of people of working age who aren’t in work. The academic meaning, on the other hand, is the number of people in the labour market but not in work – that is, on the dole.
Predictably, yesterday’s figures showed an improvement on the first score, but a worsening on the latter. So although the government was buoyed by evidence that the private sector had, as hoped, generated more new jobs than the public sector had culled, the opposition could rightly point to an increase in JSA claimants that theoretically increased the government’s welfare bill.
This intractable debate will doubtless be repeated on a monthly basis for a while to come.
What the trends say about the wider economy is even more open to conjecture. However, the release of these statistics combined with a surprising and substantial monthly fall in the rate of inflation makes this a good week for the government’s economic strategy.
However, both inflation and unemployment remain stubbornly – and worryingly – high.
Prices may not be rising as fast as they were, but a 4% rate of inflation still puts a huge squeeze on a population also facing wage freezes, public-service cuts and the lingering threat of redundancy. Last week’s tax changes helped workers on lower incomes, but middle-class families suffered.
And we have still to see the more lasting impact – if any – of the negative growth recorded in the final 3 months of last year. This could yet prove to have stunted both businesses’ and consumers’ confidence, stifling profits, employment, wages, savings, spending, and thus profits (a virtuous circle in a booming economy, a vicious one in times of bust).
In circumstances like these, confidence is key.
So as important as getting the policies right is the need for the government to convince the public that those policies are right, that they are necessary and that – given time – they will be effective.
But time is a precious and, it seems, increasingly scarce resource in politics these days. Local and devolved elections (and, of course, that referendum) are just three weeks away, and a strong Labour performance – which seems almost certain – will ramp up the pressure on the government.
Of course, such polls often deliver protest votes even in the best of times, but in the midst of a fledgling recovery whose policy solutions have so far been defined by uncertainty and concession, both Cameron and Clegg must see next month’s vote as a chore they could well do without.
They would surely much rather be free to concentrate on getting their message across, not only in their political but also economic interests. Instead, figures like those released this week will be fought over to such exhaustion on the campaign trail as to lose any effect on public confidence.
True, this week’s results do not spell the end of the trouble, and the headline figures do disguise some less positive trends. But they should encourage optimism after a series of recent setbacks.
When is good news not good news? When there’s politics involved.
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